The strong import figures are likely to be welcomed by the country’s leaders who are trying to recalibrate its growth model from one driven by exports and state investment to one based on domestic consumption.

– Strong yuan –

The trade data came a day after the People’s Bank of #China announced a rise in China’s foreign exchange reserves, indicating the central bank would shift its priority from curbing capital outflow to controlling yuan appreciation, Evans-Pritchard said in a previous note.

Earlier this year the yuan sank to almost 7.0 to the dollar, a level not seen in almost eight years — hit by capital outflows as the economy struggled and traders bet on US rate hikes.

However, it has enjoyed a resurgence in recent weeks and is now at a 16-month high around 6.5 thanks to lower expectations the US Federal Reserve will lift interest rates again this year, tighter controls on capital outflows and improving economic performance.

“The strong yuan is favourable to China if they want to buy more from the rest of the world,” Yeung said.

The Chinese economy saw better-than-expected growth in the first two quarters of the year thanks to debt-fuelled investment in infrastructure and real estate although warnings of a potential financial crisis have spurred Beijing to clamp down.

The long-term outlook remains clouded by geopolitical tensions linked to the North Korea nuclear crisis as well as US President Donald Trump’s anti-globalisation rhetoric and threats to slap #China with tariffs.

China last month had halted imports of iron, iron ore and seafood from North Korea, whose latest nuclear test last weekend met strong condemnation from the emerging BRICS nations during a summit this week.

However, Friday’s data show an 8.4 percent increase in exports to the United States last month. And while that lifted its controversial trade surplus with the country to 26.2 billion, Betty Wang of ANZ research said in a note: “A broad-based trade war between the two countries is unlikely.”

Shayne Heffernan Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.